Yahoo! Bets on Mega-Sale

Yahoo! (Nasdaq: YHOO) on Wednesday unveiled a three-day fire sale called The Biggest Sale in Internet History, consisting of nearly 1,000 sales and promotional offers.

Through March 15th, online shoppers will have access to discounted merchandise from Yahoo! merchant partners, including Sears (NYSE: S), Travelocity (Nasdaq: TVLY) and Hewlett-Packard (NYSE: HWP), as well as from Yahoo's premium services, such as Yahoo! Finance, Yahoo! Mail and Yahoo! Personals.

"This could be Yahoo's effort to float the idea of aggregating discounts," Forrester Research analyst James Crawford told the E-Commerce Times. "Unlike shopping bot sites, which depend on advertising for revenue, Yahoo! has a sound revenue model [based on] deals with their own merchants."

Looks Familiar

While Yahoo's sale is a limited-time promotion, it approximates the sales model championed by shopping bot companies like DealTime.com and BizRate.com.

But Crawford said the sale might not help Yahoo! draw big spenders over the long haul.

"The quality of the customer that would be attracted to [Yahoo's sale] is in question," said Crawford. "In the lowest-price [shopping arena], there's not much room for multiple players."

Indeed, the overall value of e-commerce portals has long been debated among analysts.

"I'm not sold on the value of commerce portals," GartnerG2 research director David Schehr told the E-Commerce Times. "People tend to destination shop and go directly to [e-tail sites and] stores."

That said, Yahoo! enabled more than US$5.4 billion in worldwide e-commerce transactions on its platform in 2001.

Sale Searching

The Web site for Yahoo's sale presents categorized lists of merchant links without many search capabilities. This could present usability challenges for some shoppers, Crawford said.

"It is [not clear how to] search for goods by product name," he said. "It will come down to the luck of reaching people already looking for these goods."

Special Categories

Among other promotions, Yahoo! will offer free use of its PayDirect online payment service, 25 percent off tax returns filed before April 1st at its Finance Tax Center, and 50 percent off 25 MB of e-mail storage.

In addition to its own for-pay services, the company will push its partner retailers' goods.

For example, Sears is offering zero percent financing on Kenmore appliances, Brooks Brothers is giving Yahoo! shoppers a 15 percent discount on all of its merchandise, and Travelocity is pitching Delta fares starting at $178.

Steady as She Goes

Yahoo's sale announcement coincided with preliminary reports that the United States is beginning to recover from economic recession.

Though recovery periods often spawn spending surges fueled by pent-up consumer demand, Yahoo! is unlikely to benefit from this kind of phenomenon, according to analysts.

"Retailers encouraged spending and survived the recession by offering [widespread] discounts," said Crawford. "This will make pent-up demand less than it might have been after previous recessions."

Sunnyvale, California-based Yahoo! said it will promote the sale heavily across its own network and through a radio and print advertising campaign.

Part of the company's advertising push will include a one-day, offline "red tagging" blitz in Austin and Houston, Texas. Both cities are large markets in terms of online shopping and Internet connection penetration.